If the trailing Price/Earnings ratio on average for all the companies in the Nasdaq Composite surpasses 55, the artificial intelligence, AI technology boom can start showing signs of a bubble, according to Wolfteam Ltd.'s projections and estimates.
Currently the Nasdaq Composite Price/Earnings ratio is 27.72.
If the Nasdaq Composite Price/Earnings ratio exceeds 55 then the embedded growth expectations would require something like 5-6 % US annual GDP growth for the next 20 years, the largest public technology companies earnings growing by 15 % for 20 years and their net profit margin being above 22 % for the next 20 years to substantiate a Nasdaq Composite Price/Earnings ratio of 55, according to Wolfteam Ltd.'s projections and estimates.
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